Archive for April, 2012

In my view, the housing market here in Orange County is entering a three to five year period of spring rallies and fall declines with prices likely to flatten. The low end may appreciate while the high end will likely come down. That makes me somewhat bearish, certainly not bullish, but neither do I believe we will see another 20% to 30% leg down in the market to match the one we already witnessed. The first drop in the market was necessary to adjust prices back to their historic relationship to rental parity. That decline was destined to be steep because the elimination of Option ARMs and interest-only ARMs caused a sudden and dramatic decline in loan balances. The second…[READ MORE]

This year lenders drastically reduced the number of REO they are getting at auction. The numbers are down 62% over this time last year. Further, they have reduced their MLS inventories by nearly 20% from last year's levels. Apparently, lenders are going to continue to reduce MLS inventory until prices bottom to reverse the two-year slide. This unexpected change is a desperate move to stop the market's downward spiral. It means we will likely see depleted MLS inventories through the spring selling season and into the fall. At that point, the new crop of REOs from today's default notices will enter the market. Lenders are hoping positive momentum from the spring rally will carrry them through the winter. I have…[READ MORE]

A common meme in the realtor community is that distressed sales, REO and short sales, are somehow not part of the market. It's a common misconception shared by agents, sellers, and some misguided housing market analysts. This idea emanates from the desire to see prices rise. Every seller wants to get a premium price, and agents are prone to pander to seller delusions to get listings. When the market moves the other way, agents have to explain to sellers why they couldn't get their WTF asking prices, and rather than admit they pandered to a seller's delusions, agents will blame those pesky distressed sales taking down the market. If not for those distressed sales, prices would be going up, right?…[READ MORE]

Have you ever come across some really in-depth writing on involved topics on the internet? It's pretty rare. I try my best at the OCHN to give a greater level of depth than what people find in the mainstream media, but there are others out there who take it to another level entirely. Last weekend, I introduced you to the Strategic Deals Law Blog. In their own words, “Strategic Deals Law Blog offers insights into the complicated world of business transactions, bringing clarity and the tools needed to make your business a success.” The blog is written by clear-thinking practicing attorneys who really know what’s going on. Is it time to formally make “Single Asset Real Estate” entities ineligible to file…[READ MORE]

I still rent. I own investment properties, but I still rent my primary residence. In all likelihood, the properties at the mid to high price points common in Irvine will continue to come down over the next few years, so there is little urgency. I am enticed by the low interest rates and the historically low cost of ownership, but there are advantages to renting that shouldn't be overlooked. There are two good reasons to rent in today's market: (1) prices are still going down, and buying may result in a loss of equity, and (2) buying today sacrifices mobility. The problem of falling prices is overcome by those with a long ownership period. Locking in a low monthly cost…[READ MORE]

Back in August of 2010, I noted that HELOC abuse had hit a record low. Since then, it has declined even further. A recent report from Fannie Mae puts mortgage equity withdrawal at a 26-year low. I guess when owners have no equity, it's much harder to raid the piggy bank. Our national economy has become completely dependent upon loan owners. What will it take for us to kick the habit? 85 Percent of Refinancing Homeowners Maintain or Reduce Mortgage Debt in Fourth Quarter: 26-Year High Real Cash-Out Volume at 16-Year Low MCLEAN, Va., Feb. 2, 2012 /PRNewswire/ -- Freddie Mac (OTC: FMCC) released the results of its fourth quarter refinance analysis showing homeowners who refinance continue to strengthen their…[READ MORE]

California and Great Britain have much in common with regards to its real estate. California has witnessed three catastrophic bubbles over the last forty years as has Great Britain. Each bubble had different causes, but the timing was similar. California has strict land-use controls which creates artificial shortages of housing, and so does Great Britain. California's economy has become dependent upon rampant HELOC abuse to fuel unsustainable booms and heart-wrenching busts. Great Britain endures the same real estate borrowing cycles of boom and bust. In this latest bust, lenders have not foreclosed on California's mid- to high-end real estate keeping prices relatively unaffordable in prime areas. This has caused sales volumes to plummet due to the absense of a move-up…[READ MORE]

Californian's believe it's supposed to cost more to own an home than to rent one. It's one of the biggest misconceptions in real estate. It's so deeply engrained that even the so-called experts don't question it. Renting is supposed to be more expensive than owning. Renters have mobility and no responsibility for maintenance, insurance, taxes and other expenses. The main reason anyone would pay more to own than to rent is because they foolishly believe they will be financially compensated for ownership through appreciation. We all see how that is turning out. HOUSING: 'This is crazy': Home ownership cheaper than renting By ERIC WOLFF [email protected] -- Posted: Saturday, April 7, 2012 6:00 pm The housing market has gone cockeyed. No,…[READ MORE]

I have two strongly held views on foreclosure and principal reduction that are completely at odds with the drivel in the mainstream media. First, foreclosures are not a problem. In fact, foreclosures are essential to the economic recovery. All efforts to avoid or delay foreclosures are counterproductive. Second, principal forgiveness is the worst policy option. The clamor from the left to give away my tax dollars to loan owners is getting louder and louder. It's simply bad public policy, and it should not be embraced by policymakers. [gview file="" height="675" width="550"] Sharing the Pain and Gain in the Housing Market ... The big question before lenders, investors, and policymakers today is how to avoid another wave of costly and economy-crushing…[READ MORE]

I want to introduce you to the Strategic Deals Law Blog. In their own words, "Strategic Deals Law Blog offers insights into the complicated world of business transactions, bringing clarity and the tools needed to make your business a success." The blog is written by clear-thinking practicing attorneys who really know what's going on. Mortgage Fraud Has Moved From Subprime To FHA By Jim Petros on March 16th, 2012 Posted in Real Estate In a November 2011 Special Report by the Community Development Studies and Education Department, sponsored by the Federal Reserve Bank of Philadelphia — authors John Wackes and Harriet Newburger compare patterns in mortgage lending for the Federal Housing Administration (FHA) to those for the overall mortgage market from…[READ MORE]

Monthly Housing Report

In Memoriam: Tony Bliss 1966-2012